Welcome to the February installment of Null's Nuggets! I hope you enjoy this month's article. With the economy being one of the major topics of discussion these days it's a timely and interesting subject. 

I also wanted to tell you about the exciting events planned this spring. The big event is the Limited Government Week Forum (LGWF) co-sponsored by the Limited Government Forum and the Center for the Study of Government and the Individual (CSGI). 

Please be sure to mark your calendars to attend the Limited Government Week Forum, April 27 through April 30, 2009. The LGWF will be held at the Cheyenne Mountain Resort again this year. Please see the brief description below. We look forward to seeing you there! 

Sincerely,
James A. Null
Executive Director, CSGI

In my last Null's Nuggets, I cautioned you to "be careful of what you wish for!" The subject was about the lack of appropriateness of our Congress managing your money for you. This Nugget will focus on what you don't know about another perceived government agency, The Federal Reserve.

Alexander Hamilton (one of the early "Centrists) led the first effort to establish a US Central Bank (1791) as a result of his belief that the finances of the new nation should be centralized in the federal government. That bank lasted about 20 years and was abolished. The Federal Reserve was established around 1913 to regulate banks and money making. Today most Americans believe that the Federal Reserve is run by the President or Congress. In fact the President appoints the head of the reserve and Congress can establish the amount of gold backing that our paper money will have (about ten percent of the Federal Reserve certificates are backed by gold).

Although the head of the reserve is appointed by the President, the board of governors (7 members) appoints the 12 members of the regional banks who attending the open market meeting. So, it turns out that the board meets in private and acts on interest rates and money making decisions. There is no accountability to anyone! The President or the Congress have little to say about its activities. In fact, in 1993 the Chairperson of the House Banking Committee called for an independent audit of the Reserve's activities, he also called for open meetings for the reserve (in fact, he called for the video taping of their meetings that would be open to the public to view), and for the President to choose the 12 heads of the regional banks. Then President Clinton refused to do any of these actions because it would undermine the public's faith in the Federal Reserve!

So the long and the short of it is simply this- Who is in charge of The Federal Reserve? Remember all the financial promises from all of the candidates for the presidency? None of them seem possible by any of our government officials. Perhaps Professor Murray Rothguard was right when he made the following observations about the Federal Reserve- "The reserve has no budget, it is accountable to no one, (it is not accountable to the Congress) and it is subject to no audit."

I am reminded of the lines from Butch Cassidy and the Sundance Kid-Who are these guys?

James A. Null
Executive Director, CSGI